FY launched with costlier power, water

Households are facing average electricity price increases of 10 per cent and water bill rises of 18 per cent from today, and business is struggling to manage the growing amount of red tape and regulation.

Although federal and state governments were keen to promote tax incentives and changes to benefits that begin on the first day of the new financial year, business groups said higher compliance costs and regulation were becoming a serious problem.

Chamber of Commerce and Industry Queensland president
David Goodwin
said the federal government was simply cost shifting by moving the administration responsibility for the 18-week paid parental leave to small employers.

He said many small companies, which were already struggling to deal with compliance and regulation issues, would find it hard to cope with the additional burden.

“If the federal government wants to do this social program – and it is a social program – they should administer it," Mr Goodwin said.

“It’s cost shifting and it is just more administrative burden for business."

The federal government, which has been administering the scheme for the past six months, said more than 8100 employers had already registered to provide paid parental leave to their employees.

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Mr Goodwin said businesses not associated with the resources boom were yet to recover from the global financial crisis. They now faced rising state and local government charges in the new financial year.

Households and businesses, who have been hit with double-digit price rises on their power bills the past few years, will be slugged by more rises in 2011-12. NSW will lead the pack with an average price rise of more than 17 per cent.

The Energy Users Association of Australia (EUAA) warned yesterday power prices could go higher once a carbon price was introduced and more expensive renewable energy production comes on line.

“If a carbon price succeeds in being legislated, there will be further significant electricity price increases to follow," EUAA chief executive Roman Domanski said.

Water charges, as well as public transport and motor vehicle registration in most states, are also set to rise today.

Families will also be hit with the flood levy – which will help pay the commonwealth’s share of the costs of the floods and cyclone in Queensland earlier this year– and it also starts today.

The levy, which the Gillard government said would last for only one year, kicks in for those who earn more than $50,000.

Treasurer
Wayne Swan
said the levy would help raise $1.7 billion towards the $6.6 billion needed to fund the recovery from recent natural disasters across the country.

Mr Swan said about 60 per cent of taxpayers would contribute less than $1 a week.

“For those who earn $80,000 it will be about the cost of a coffee a week, or $2.88," he said.

But Mr Swan said other changes which come into effect today – including the pensioners’ work bonus, the low-income tax offset being brought forward, the education tax refund extension to school uniforms and the ban on exit mortgage fees – would help take the pressure off families.

“These changes will put a little more money in the pockets of millions of Australians, taking a bit of the pressure off their cost of living," Mr Swan said.

State governments have been under pressure in the recent round of budgets to provide cost of living relief from rising electricity and water bills.

But they have been constrained by tight fiscal conditions and relief has mostly been restricted to pensioners and low-income households.